Mohamed El-Erian Some See Financing By SpaceX As The 'Perfect Example' Of A Market Bubble, And Others As 'Illustrative' Of Technological Breakthrough
SpaceX SPCX | 0.00 |
Economist Mohamed El-Erian said Sunday Space Exploration Technologies Corp‘s (NASDAQ:SPCX) recent public markets financing has become a flashpoint for investors, dividing opinion over whether it reflects a technological breakthrough or a market bubble.
The Bull-Bear Divide Over SpaceX
“Most people I interact with on this issue agree on the importance of SpaceX’s recent public markets financing,” El-Erian said in a post on X.
Supporters of SpaceX’s view the company’s ability to raise substantial capital through public equity and bond markets as validation of its long-term growth prospects and technological breakthrough, El-Erian added.
Critics, meanwhile, view it as “the perfect example of a market bubble,” citing wider bond spreads and the stock’s decline below its post-IPO trading level, though it remains above its IPO price.
El-Erian believes both camps are relying on current market data to support sharply different conclusions.
Bond Performance Adds To Debate
Last week, SpaceX raised $25 billion through senior unsecured notes, weeks after raising nearly $86 billion in its blockbuster IPO.
The company’s bond offering has since come under pressure, with paper losses reaching about $305 million since trading began Tuesday, according to a Bloomberg report citing dealer quotes.
The longest-dated 2056 notes have widened by as much as 0.28 percentage point from their issue spread, with credit traders telling Bloomberg they could not recall a recent investment-grade offering weakening this sharply.
Gensler’s Earlier Warning
El-Erian’s comments come less than a week after former SEC Chair Gary Gensler warned that SpaceX could face a “great rebalancing” as lockup restrictions expire in August, allowing early investors to sell shares.
Gensler said the resulting selling pressure could weigh on SpaceX stock and potentially broader markets if large early investors begin taking profits.
How SpaceX Has Traded Since Its IPO
SpaceX, which has a current market capitalization of 2.02 trillion, priced its IPO at $135 per share on June 12 before surging nearly 19% to close at $160.95 in its Nasdaq debut.
Shares climbed to a post-IPO high of $225.64 before reversing course, leaving the stock down 32% from its peak while still trading above its IPO price.
Nasdaq confirmed Friday that SpaceX will be added to the Nasdaq-100 Index effective July 7.
Price Action: On Friday, shares of SPCX closed 0.15% higher at $153.23.
Benzinga edge rankings indicate that SPCX has a negative price trend across the short, medium, and long-term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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